News / Air charter market braced for very busy Q4, and prices are rising

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Charter brokers have warned that the fourth quarter in air freight will be very busy – but that capacity is still available “for a price”.  

However, brokers aren’t too concerned over impossibly high demand in the case of a US east and Gulf coast port strike. 

“There is tight availability for widebody aircraft,” explained Dan Morgan-Evans, group  cargo director for Air Charter Service. “Ecommerce is a factor everywhere really, and it’s a strong market. 

“There is capacity available, you can always find it, but it’s about the price that people are prepared to pay. Capacity can be found if the price is right.” 

Steve Manser, business development director for Hunt & Palmer, agreed: “There is still availability but at a price – still people are sitting on the fence, but pricing is only going one way.” 

While ecommerce is creating the buoyant market, there are fewer concerns over what will happen in air freight if the ILA port workers strike on 1 October. 

“Any port strike-related demand has not come to my attention yet,” said Mr Morgan-Evans.  

“With a west coast strike, there is more traffic that comes that way, and there are longer sailing times, which impacts airfreight more. There is existing air capacity on the east coast – the transatlantic has never been in high demand for charters.

“When the Baltimore bridge collapsed, for example, it didn’t really have an impact on us. So I don’t know if an east coast strike would have a big effect. However, it is in the run-up to Christmas, so that could make a difference.” 

Mr Manser said the port strike could make things worse, but added that the hottest route was the transpacific.  

Charter rates were already high, added Mr Morgan-Evans. “As we go into the season, we are expecting them to go up. And they stayed high over the summer, there wasn’t a slump, even though scheduled airfreight usually declines in summer.” 

While he noted that ecommerce was taking up “a huge amount of capacity”, he added that the Suez Canal avoidance may also have contributed to a buoyant market. 

“The Red Sea crisis and exports from Bangladesh and India have been going on all year. It will be interesting to see, if that does dissipate, how much air capacity would be freed up.” 

He said that ecommerce shipments amounted to “a hell of a lot of cargo” and asked: “Who is buying this stuff? Lots of it looks like it will just end up in landfill. The amount being shipped is incredible.

“I hope it’s not a bubble, and if it’s all being ordered by consumers, it probably won’t stop.” 

Some observers have queried what impact the recent White House executive order on de mimimis exemptions would have on air cargo. Mr Morgan-Evans said: “There is an unfair competitive advantage over traditional bricks and mortar businesses which have to pay import duties. But I don’t know if you can stop this. It’s a juggernaut. Consumer behaviour has changed.” 

He added that the non-ecommerce market was also doing well.

“There wasn’t the normal summer lull, although July was a little quiet. But August bounced back and September has started well, so there are good indications for Q4. September is the litmus test, and is above where we thought it would be. 

“The non-ecommerce market is usually busier in the last four months of the year too, and that has picked up as well. So we are expecting a good Q4. 

“But it’s a funny old market.” 

Meanwhile, Xeneta chief airfreight officer Niall van de Wouw warned this week: “There is a storm coming to the outbound China air freight market.

“Shippers need to take action now and have a clear plan in place for when the storm hits, such as working with their vendor to minimise the use of spot market capacity, which will likely come at spiralling costs.” 

DHL Express last week said it had invested more than €100m to increase its capacity in Q4. It said it was investing in eight new 777 freighters for transpacific and intercontinental routes between Asia and Europe, and expected “a healthy surge in demand for express services in the fourth quarter”.